Hong Kong trade talks: The beginning of the end?

Will the December round of World Trade Organization talks in Hong Kong be the beginning of the end of a process that started in Havana, Cuba, in 1947 and has gone on nearly three decades?

Or will it be yet another chapter in acrimony, as in Seattle in 1999, where demonstrators and police clashed in the streets, or Cancun in 2003, when discussions fell apart over agricultural issues and rich country/poor country bickering?

If a panel discussion at the annual conference of the Society of American Business Editors and Writers is any indicator, the Hong Kong discussions won’t exactly be a cakewalk.

“All the easy stuff is done; all the tough stuff remains,” said Bill Bryant, chairman of Bryant Christie, Inc., which works with exporters to bring down trade barriers and develop new markets. He is a former vice chairman of the Agricultural Technical Advisory Committee that counsels the government on trade policy issues.

Trade negotiators, he said, are “still living with the problems” that arose from the Seattle talks and the Cancun conference — “a raw, blunt exercise in power… in which the train was run off the cliff.”

Referring to the United Nations Millennium Project, which has as one of its goals halving poverty in the world by 2015, Bryant said, “It can’t be done just with aid and charity; we have to come up with a way for trade to help meet this challenge.”

Unfortunately, he said, many developing nations are shooting themselves in the foot by imposing trade tariffs, which hurt them as much as their trading partners. “If we’re to increase developing country economic gains, we have to cut tariffs between developing countries.”

That, he said, requires “good governance” within the countries.

U.S. business and agriculture should support the WTO, because “it’s the only game in town,” said Timothy Punke, partner in Preston Gates Ellis and former chief international trade counsel to the Senate Finance Committee.

There have been a lot of bilateral trade talks, he noted, “but the benefits agriculture and business will get are much more comprehensive with the WTO.”

World tariffs are “prohibitively high,” he said, compared to an average of 2 percent for the United States. “The goal is to get these tariffs down” in both bilateral talks and the WTO.

Issues related to the Central America Free Trade Agreement (CAFTA) and China “will determine how we move ahead with the WTO,” Punke said.

CAFTA is “very controversial,” he noted, with opposition from U.S. labor/environmental groups, the sugar industry, and textile/apparel groups. With “a feeling of concern” in Washington and in Congress, it’s “going to be very hard to pass.”

Gawain Kripke, senior policy advisor for Oxfam America, a Boston-based international development and relief agency that operates in over 100 countries, said the WTO is “a key drama in global politics for billions of people in developing and ascending countries who want more out of trade.”

A 1 percent share of the global market for these countries could exceed the billions of dollars they now receive in aid, he said.

“Trade is largely a rich country game, with other countries just bit players.” A lot of the rules “are prejudiced against poorer countries,” he said.

For example, he said, products exported to the United States by Bangladesh and others among the world’s poorest nations are “taxed at the highest rate.”

The “central drama” in the WTO talks, Kripke said, is agriculture, which “remains sort of the third rail in trade policy — it’s very politicized.”

In all the rich countries, he said, there are 50 million farmers, while 2.5 billion people in the developing world rely on agriculture. “The poorer the country, the more agriculture dominates its economy.” Resolving agricultural policy inequities will be a major step in addressing poverty, he said.

The record of the WTO talks has been “one of failure and paralysis,” said Thea Lee, assistant director of public policy for the AFL-CIO labor union.

“My constituency is the American worker, and this is a tough issue,” she said. “My view is both more pessimistic and critical (for the WTO) lifting countries out of poverty…

“A lot of what was agreed to in DOHA was vague and didn’t put any meat on its bones… Trade liberalization has failed to live up to its promises for both poor and rich countries. There’s something wrong with the whole concept of how we’re doing trade liberalization and surrounding policies.

“Every time we open somebody else’s market, there are just more imports sucked into the United States — and that’s an unsustainable situation.”

The main benefit of the trade talks, Lee said, has gone to “multinational corporations, while farmers and workers have been the last to benefit. Too many people are saying this system just isn’t working, that we need a new set of rules.”

She lamented that the WTO has no provisions for worker rights. “China is probably the most important competitor in the global economy, and yet they can throw workers in jail” for protesting poor working conditions.

Timothy Punke disagreed: “Before NAFTA (North American Free Trade Agreement) there was almost no talking” about labor and environmental issues, but “since then, they have been a core part of every bilateral agreement we’ve done —there has been significant progress.

“We can’t just tell a Cambodia that ‘we expect you to have these standards in place within five years or we won’t trade with you.’ Let’s think creatively how we can accomplish this, and give these countries the technology and resources to help them make the desired progress on environmental and other issues.”

Thea Lee countered: “I wonder why U.S. policymakers don’t put more focus on what it would take to keep jobs in the United States, instead of sending them overseas. We can’t keep consuming a half-trillion dollars more goods each year than we sell. Workers in this country and other countries are getting screwed.”

The textile industry has lost hundreds of thousands of jobs in the United States, she said. “American consumers can’t save enough on cheap imported goods to make up for what they’ve lost in jobs.”

Timothy Punke responded: “There has to be a realization, looking ahead 10 years to 15 years, that there are some things the United States will be competitive at and some they won’t… Not everyone wins in free trade, but most do.”

Said Gawain Kripke: “There will be short-term winners and losers. What we don’t do very well in this country is handle the transitions.”

Agricultural subsidies “have created enormous distortions” in trade, he said, and are “having a very big impact on poor people” of the world.”